Ulster Bank said yesterday that it had been in negotiations with the Irish Bank Officials Association (IBOA) since March in relation to non-pay issues.

Negotiations on pay would begin "shortly", the bank said.

It comes after the lender confirmed last month that it returned to profit in the first half of the year.

Following the round of talks that kicked off in March the bank has accepted an industrial relations package recommended by independent mediator, Mark Connaughton, that includes details of how future redundancies will be handled.

"Both the bank and the IBOA anticipate significant changes in the bank that will have direct impact on employees, including a significant number of redundancies," Mr Connaughton said in a document setting out his recommendations.

The policy paper did not rule out mandatory job cuts, but said it expected redundancies to be "volunteer-led".

Ulster Bank indicated previously that it expected to cut its work force from 5,600 to between 4,000 and 4,500 by 2016.

Executives previously indicated that significant job cuts would come from attrition, as departing staff are not replaced.

Under the terms now agreed, bank staff opting to take redundancy will receive a severance package equal to four weeks' pay per year of service - inclusive of statutory payment - capped at two years' pay, or €300,000 per person.

Under an early retirement scheme, qualifying staff will receive a one-off payment of 1.25 weeks' pay per year of service, and will be eligible for a lower pension until full payments kick in as they reach retirement age.

Transfers

Staff leaving the bank will keep their favourable mortgage borrowing rates under the plan.

The mediator's recommendations also cover internal transfers and reorganisations for staff not leaving the bank, including a time scale for reducing pay to employees who opt for so-called "grade reductions".

The agreed change programme will run until the end of 2016, meaning it will be in place as the bank cuts its branch network from 199 to 175 or 185. The bank will also shrink its head office work in line with its smaller size; realign its Northern Ireland business more closely with parent Royal Bank of Scotland; and try to attract new investment into the bank south of the border during the same time period.